Warren Buffett, Wells Fargo’s largest and most powerful shareholder, doesn’t want the troubled bank to hire a CEO from Wall Street.
Recruiting a Wall Street executive is “automatically going to draw the ire of a significant percentage” of the US Senate and House of Representatives, Buffett told the Financial Times in an interview that published on Sunday. “And that’s just not smart.”
The comments from Buffett, whose Berkshire Hathaway (BRKA) owns nearly 10% of Wells Fargo, underline the deep political and reputational troubles at one of America’s largest banks. Tim Sloan stepped down abruptly as CEO late last month after failing to stop the bank’s two-and-a-half-year crisis.
Wells Fargo (WFC) pledged to find an outsider to replace Sloan, a three-decade veteran of the bank who despite efforts to fix the bank was stained by its cultural problems.
“They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street,” Buffett told the FT. “They probably shouldn’t come from JPMorgan or Goldman Sachs.”
That would exclude several individuals who have emerged in press reports or analyst chatter as replacements for Sloan.
For instance, former Goldman Sachs (GS) execs Gary Cohn and Harvey Schwartz have been linked in media reports to the Wells Fargo job. Both have denied interest.
And analysts have floated the possibility of Marianne Lake, the well-respected CFO of JPMorgan (JPM), as a replacement for Sloan. Lake would be the first woman to lead one of the big US banks.
Buffett’s comments do not rule out the possibility that San Francisco-based Wells Fargo could turn to another rumored name: Richard Davis, the former CEO of US Bancorp (USB). Davis doesn’t come from Wall Street and he’s even got roots in California.
Wells Fargo declined to comment.
Buffett continues to express optimism in Wells Fargo’s underlying business despite the harm done by the fake-accounts scandal that erupted in September 2016.
“If you look at Wells, through this whole thing they’re uncovering a whole lot of problems, but they aren’t losing any customers to speak of,” said Buffett, whose firm at the end of 2018 owned more than 400 million Wells Fargo shares currently worth about $21 billion.
But Wells Fargo’s business has been hurt by rising legal fees, a tarnished reputation and tough sanctions from federal regulators.